Mumbai, It is now a matter of time before Mr Ratan Tata gets to finally sit in the driving seat of Jaguar and Land Rover, the two marquees of Ford, as Tata Motors is poised to seal the deal with the US carmaker and make a formal announcement on Wednesday.
Reports reaching from London at the time of going to press on Tuesday indicate that Tata Motors is close to breasting the tape to acquire the two luxury British brands of Ford at a price of little over $ 2 billion.
Tata Motors impending acquisition of the two iconic brands marks another significant step by the tea-to-truck conglomerate towards globalisation of its sprawling business empire. Early last year, Tata Steel made international news when it acquired Anglo-Dutch steel maker Corus for $ 12.9 billion.
The Indian automobile maker has been able to get the major trade unions of Jaguar and Land Rover to throw their weight behind the take over, sources said. The union has supported the Tatas? bid for the two brands throughout the negotiations, but had put forth some demands, including non-retrenchment of any worker and continuation of supply of engines by Ford after the Tata takeover.
After the edging out its Indian rival Mahindra & Mahindra and US buyout fund OneEquity in the race to acquire the two brands, the Tata Group emerged as the front-runner in early January this year and since then it has been having ?focused and detailed? discussions with Ford on the acquisition.
Reports indicate that the agreement will include Ford?s commitment to continue contributing to the pension funds of the two brands. The Tatas, on their part, are expected to pledge to continue buying engines for the two brands from Ford. Further, the Indian company will give its commitment to retain the present workforce of the two brands, the sources said.
These commitments are expected to bring the trade unions on board for the sale, as these were the major demands of the 16,000-strong labour force of Jaguar and Land Rover.
Sources say that the final agreement will not include Ford retaining a minor stake in the two brands, as was speculated in the foreign media earlier. Ford will make it clear that it will not hold any stake in the two brands, as it intended to fully concentrate on its North American operations, they said.
Even as it was negotiating with the US carmaker, Tata Motors has been finalising it financing strategy for the buy-out. It is planning to launch a $ 3-billion syndicated loan and raise a further $1 billion from the domestic or overseas market, sources close to the group said.
Tata Motors acquisition of Jaguar and Land Rover will give it a wide spectrum of product portfolio within the automotive space. While at one end, it will have the Rs 1 lakh car, which may become the world?s cheapest car in this category when it rolls out of the factory later in 2008, at the other end it will have the two iconic brands from the Fords stable.
Tata Motors revenues touched $ 7.2 billion in 2006-07, with an estimated four million Tata vehicles plying across India.
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